Introduction: Taking an investigative look into the deepest, most secure “vaults” of international finance and intrigue, this program sets forth the chilling odyssey of individuals who have run afoul of institutions secreting billions of dollars in gold looted by the Axis in World War II. The “Bottom Line”–no gambit goes unused, and no principles or statutes go unbroken in the ongoing, successful quest to keep this vast wealth under the control of the private and governmental interests that control it, and continue to profit from its possession.

Of particular interest for our purposes are the Union Bank of Switzerland and Citibank, both recipients of billions of dollars in U.S. taxpayer bailouts, despite the kingly sums of “Black Gold” from WWII controlled by those institutions.

Much of the program focuses on attempts by the heirs of OSS and CIA officer Severino Santa Romana to recover billions of dollars from accounts that he had set up privately and in conjunction with the CIA and other government agencies. Drawing on vast sums of gold secreted by the Japanese in the Philippines during World War II and recovered by U.S. military and intelligence interests after the war, these astronomical accounts were used to finance covert operations during the Cold War, as well as to buy and sustain political favors throughout much of the world’s power structure.

Journalistic and political illumination of the dynamics of the clandestine power deriving from these accounts would shake the world to its foundations. Preventing the light of day from penetrating the “Darkness in the Vaults” mandated the unnerving machinations used to preserve the secrecy surrounding these enormous fonts of economic and political power.

When attempting to recover an account at UBS valued at $192 billion (when gold was $300 hundred dollars an ounce!), Santa Romana’s heirs were warned that UBS and/or the Swiss government might well have them killed!

Confronted with irrefutable evidence of many billions in Santa Romana’s gold in its coffers, Citibank (again, like UBS and other beneficiaries of looted war gold accounts, the recipient of U.S. bailout funds), Citibank simply transferred the funds offshore, where they were beyond the legal reach of Santy’s heirs and their attorneys!

In apposition to the story of the threats delivered to Santy’s heirs, the authors cite the harrowing experience of UBS employee Christophe Meili, who broke the story of Holocaust victims’ unclaimed funds in Swiss bank accounts. Meili and his family got numerous death threats, and he was labeled the tool of a “Jewish Conspiracy” by the head of UBS, his employer!

Terrifying irregularities also befell Australian broker Peter Johnston and W.R. “Cotton” Jones, both of whom undertook investigations of gold certificates held by others. Johnston was arrested on the grounds that a UBS gold certificate of which he held a photocopy might be a fake!

“Cotton” Jones was confronted and threatened by three Secret Service Agents when he pursued a lawful investigation of a UBS financial instrument on behalf of a client!

Program Highlights Include: The various devices by which banks disguise the genuine nature of gold certificates and other financial instruments so that they can be selectively labeled as fraudulent; the kidnapping and terrorizing of Ben Aragones, the client on whose behalf Jones undertook his investigation; review of the role of “offshore” in preserving banking and corporate secrecy and illegality; review of the genesis of Santa Romana’s gold recoveries and the origins of Golden Lily, the Black Eagle Trust and other financial entities deriving from looted WWII gold.

In 1948 a suit was to be filed by certain minority stockholders of Interhandel against the attorney general of the United States, as successor to the wartime Alien Property Custodian, and the U.S. Treasury, for the return of 89 percent of GAF, of a value of $100 million plus $1.8 million seized in cash in 1942. Interhandel, through its American attorneys, first filed an administrative claim, which was denied. The suit then went to the District Court for the District of Columbia, then to the Supreme Court, and back to District Court. The Swiss claim was based
on the argument that Interhandel was a Swiss corporation, that it was not nor had it ever been an enemy of the United States, and that it owned the shares in question. The American government rebuttal was that Interhandel was the result of a conspiracy between the private bank of H. Sturzenegger, formerly E.Greutert & Cie., and I.G. Farbenindustrie of Germany and others “to conceal, camouflage, and cloak the ownership, control, and combination by I.G. Farben of properties and interests in many countries of the world, including the U.S.”

As the case dragged through the U.S. courts, Schmitz would have Interhandel cosmeticized even more. Charles de Loes, past president of the Swiss Bankers Association, would be elected chairman, and the general manager of each of the Big Three banks would be appointed to the board. They would agree to this because the honor of Swiss banking and its principle of banking secrecy would be at stake. In addition, 25 percent of Interhandel stock would be registered in the name of Union Bank, whose manager, Dr. Alfred Schaefer, was of known integrity. The Swiss believed the association of such a man of high banking repute at Interhandel would impress American government authorities. But the German connection would still be there. Not only Hermann Schmitz, but also the banking connection of Union Bank of Switzerland, Dr. Schaefer’s bank, and Deutsche Bank, which acted in concert on so many deals involving not only I.G. Farben but also big Ruhr industrialists such as Thyssen A.G., the largest steelmaker in Germany. In January 1978 these two lead banks, acting through the UBS-DBCorporation, an American firm of the Union Bank of Switzerland and the Deutsche Bank of Germany, would be the financial advisors for Thyssen A.G. in its $275 million cash takeover of the Budd Company of Troy, Michigan, a leading U.S. manufacturer of auto components, truck trailers, and rail cars. UBSDB Corporation would also say that the West German companies it represented were showing a “very substantial interest in all sorts of American ventures, including mergers and acquisition.” . . .

2. A major Swiss bank has instructed its clients to sell U.S. assets or leave the bank.

Wegelin & Co., Switzerland’s oldest bank, is telling wealthy clients to sell their U.S. assets, or switch banks, because of concerns new rules will saddle investors with tax obligations in the world’s biggest economy.

U.S. proposals to extend reporting requirements for banks whose clients buy American stocks and bonds coupled with estate tax liabilities that may be inherited by the heirs of people who have such holdings prompted the advice from the St. Gallen, Switzerland-based bank, said Managing Partner Konrad Hummler.

“We came to the conclusion that it’s a threat to our clients,” Hummler, who is also president of the Swiss Private Bankers Association, said in an interview yesterday during a conference in Zurich. “It’s also a threat to us as a bank because as a custodian we are an executor to the estate. We find this aspect discomforting, so we recommend selling all American securities whatsoever.”

Hummler said he plans to raise the subject today at a meeting of the Private Bankers Association, which counts Pictet & Cie., Lombard Odier & Cie. and Mirabaud & Cie. among its members. Swiss banks, which manage $2 trillion, or 27 percent, of the world’s privately held offshore wealth, are struggling to protect bank secrecy after the government agreed to hand over the names of 4,450 UBS AG clients to U.S. tax authorities.

Hummler said he wouldn’t ask other association members to follow Wegelin’s lead. Wegelin, founded in 1741, manages more than 20 billion Swiss francs ($18.7 billion) in client assets.

“Every member is free to decide and act on their own,” he said.

HSBC Studies

Alexandre Zeller, head of HSBC Holdings Plc’s private bank in Switzerland, said his company is still studying the new rules for qualified intermediaries and will do everything it can to comply with them.

“Often in these agreements you have to understand how this will be applied, and it would be premature, especially for an international bank, to take such a decision,” he said today, referring to Wegelin’s position. “It’s not on the agenda for the moment.”

The U.S. has proposed increasing reporting and oversight requirements for so-called qualified intermediaries — foreign banks that withhold taxes on behalf of the Internal Revenue Service. In addition, new rules may mean that people who spend limited periods of time in the U.S. acquire tax obligations, including estate taxes, creating an unacceptable risk for Wegelin’s clients, Hummler said.

If a client decides to keep his U.S. investments, “then finally he has to change banks,” Hummler said.

“We’re talking about probabilities,” Hummler said. “My responsibility toward clients has to include any kind of probability, and if I see a real threat then we have to act.”

U.S. Alternatives

Wegelin is finding alternative ways of investing in the U.S. that won’t impose reporting requirements on the bank or tax liabilities on clients, Hummler said.

“The good thing is that in today’s world you can build up U.S. exposure in equities and as well in bonds through derivatives and index funds and so on, so we are switching to a European-made American exposure.”

Germany and France have also sought to weaken Swiss secrecy laws as they crack down on tax evaders.

The French government, which signed a double-taxation treaty with Switzerland on Aug. 27, obtained the names of 3,000 people suspected of tax fraud and holding accounts at three Swiss banks, French Budget Minister Eric Woerth, said Aug. 30 in an interview with the newspaper Journal du Dimanche.

“It’s not credible,” Hummler said. “The U.S. had a hard time getting these 4,450 names, then the French come and say we have 3,000? I cannot believe it, but they’re trying it on.”

3. UBS has been the primary focal point of U.S. efforts to effect transparency for the purpose of tracking tax cheaters with accounts in that bank.

The United States is to continue its lawsuit against Switzerland’s largest bank, UBS, to try to force it to identify thousands of US clients with confidential UBS accounts.

The Justice Department said in a brief filed with a Miami court on Tuesday that it was pressing ahead with its case to reveal information about 52,000 Americans suspected of using the bank to hide nearly $15 billion (SFr16.3 billion) in assets and evade US taxes.

It rejected arguments from UBS and the Swiss government that had tried to have the case dismissed. A court hearing is scheduled for July 13.

Despite media speculation about a possible settlement of the five-month-old case, the Justice Department said it was seeking to enforce tax compliance with the full weight of US law.

“The United States has a strong national interest in making sure that all US taxpayers comply with the tax laws, including disclosing their offshore accounts, and paying all the taxes they owe,” the department said in the brief.

“The United States has proven its case for enforcement. The court should order UBS to comply in full,” it added.

UBS has consistently said that enforcement of the US summons would require the bank to violate Swiss legislation on banking secrecy and was inconsistent with US-Swiss treaties.

The Swiss authorities have also said the US case violated the sovereignty of another state and should therefore not be pursued.

UBS spokeswoman Karina Byrne said the bank was “open to an appropriate solution” to avoid going to court, but said no settlement had yet been reached.

Both lawyers and analysts have been sceptical about reports that the US would drop the case against UBS without major Swiss concessions, in view of the current momentum against tax havens.

“Based on our representation of many UBS cases, it is clear in our minds that the government is going to pursue vigorously its objectives of transparency and limiting tax haven abuse,” lawyer William Sharp, who represents US clients of UBS told the Reuters news agency.

UBS and Bern have argued that any exchange of information should be handled through existing legal treaties rather than in the courts.

But the Justice Department has appeared unrelenting.

“Although Swiss interests in bank secrecy may also be important, the court must consider those interests in the context of UBS’s conduct, where for at least seven years the bank actively helped tens of thousands of Americans break US laws and evade hundreds of millions of dollars in US taxes,” the department said.

“The vital national interest of the United States in fighting attempts by US taxpayers to avoid and evade their tax obligations outweighs the general Swiss interest in maintaining the secrecy of its banking relationships, especially for those foreign lawbreakers,” it added.

In its brief, the Justice Department said that UBS had acknowledged that its bankers committed “very serious crimes on US soil” and had therefore subjected the bank to the full jurisdiction of US law.

“Swiss banking secrecy is not an impenetrable wall,” the document said.

In a position paper on the case on Wednesday, the Swiss Bankers Association (SBA) said it was “disappointed” that the US government had failed to address specific arguments delivered by the SBA and other organizations in a brief delivered in May.

The brief had argued that when the US and another country entered a treaty that established an agreed process for obtaining administrative assistance in tax matters, the treaty process should be honoured, particularly if the alternative was, as in the present case, to impose US law on a Swiss bank in a way that would require the bank to violate Swiss law.

The SBA said it continued to believe the dispute should be resolved through government-to-government negotiations and not through litigation.

In another reaction, Swiss Finance Minister Hans-Rudolf Merz said the US decision to pursue the case came as no surprise. However, he told journalists in Bern that he did not rule out an out-of-court settlement between the parties.

4. Much of the program focuses on attempts by the heirs of Severino Santa Romana to recover billions of dollars from accounts that he had set up privately and in conjunction with the CIA and other government agencies.

” . . .When he died, Santy left to fourteen heirs a fortune estimated by their attorneys to be worth over $50-billion. All their efforts to recover his assets from banks have been blocked or, more often, evaded.

The three main heirs were Santy’s corporate accountant, Tarciana Rodriguez, acting for the estate; his common-law wife, Luz Rambano; and his adult daughter, Flordeliza. After a few false starts, they turned for help to the famous San Francisco lawyer Melvin Belli, New York attorney Eleanor Jackson Piel, former CIA deputy director Ray Cline, and one of America’s best-known bankers, Citibank CEO John Reed. Also engaged in these efforts were Florida lobbyist George Depontis, former Bahamas supreme court justice Sir Leonard Knowles, and Washington attorney Robert A. Ackerman.

Because of the size of Santy’s estate, and its secretive nature, Luz, Tarciana, and Flordeliza seem to have had every conceivable obstacle put in their path. The U.S. government, and American banks, would like Santy’s assets to remain where they are. So would the Swiss government and Swiss banks, banks in Hong Kong, and in other financial centers. In a few more years, everybody connected to Santy will be dead, so custody of his cash and bullion will remain in the banks, like Holocaust gold.

For Washington, stonewalling is imperative not only because of the gigantic assets involved, but to block attorneys from pursuing discovery (as in the Schlei case), which could reveal far more than Santy’s financial data. Potentially, discovery could result in disclosure of the whole subject of covert war-gold recoveries, the Black Eagle Trust, diversion to corrupt purposes of secret funds like the M-Fund. This could damage reputations and careers, and make unavoidable an investigation by the General Accounting Office of Congress. President Ford had addressed a similar problem in 1975 when he set up the Rockefeller Commission to pacify interest in the CIA Family Jewels affair, remarking that he did not want information getting out that could blacken the reputation of every U.S. president since Truman.

Ironically, Santy’s heirs were only interested in ending their poverty, not in exposing corruption, so it would have made sense to placate them with generous settlements in return for signed agreements never to raise the matter again. Yet both banks and governments have remained doggedly opaque and obstinate in blocking the heirs-a sure sign that they have much to hide.

Although the three principal heirs showed these banks probated wills, passbooks, bank statements, receipts, all the necessary passwords, code-words, and secret account numbers, provided to them by Santy, the response was the same. With four exceptions, the banks flatly denied having such accounts, whether the account in question was a sage-deposit box, or a huge gold bullion deposit. . . .

5. Note that UBS was among the banks that actively rebuffed the lawful efforts of Santa Roman’s heirs to recover his estate.

For example, according to the Union Banque Suisse documents reproduced on our CDs, Santy’s biggest single account there was 20,000 metric tons of gold bullion. This is the account on which the title-holder was magically changed at the moment of Santy’s death, from his Crown Commodity Holdings to Major General Edward G. Landsdale [sic], bearing in mind that spelling errors made by Swiss banks are part of deliberate authenticity codes. One possibility is that on this monster account Santy was merely a straw man, being replaced by another straw man: Lansdale. We might ask, who else but a government would have sufficient leverage to make such a change at the biggest bank in Switzerland? Had UBS alone made the change, they are unlikely to have chosen the eccentric Lansdale as the new titleholder. However, by 1974, Lansdale had been out of government for a decade, and was one of the founding fathers of The Enterprise network, and an intimate colleague of some of America’s wealthiest conservative moguls. If Lansdale and Santy always had shared control of this big UBS account, Lansdale might have been able to have UBS transfer title to his name, whereafter it could be accessed by his circle. The U.S. government may not have been involved.

At $300 an ounce, this account would be worth $192-billion dollars, a lot more than the net worth of Bill Gates. Is this sum believable? Yes, if it is a covert U.S. Government account containing a mass of black gold. Just as no serious counterfeiter makes silly spelling mistakes, no conman in his right mind would dream up an account so big. Recall that the jury in the Roxas Gold Buddha case saw convincing evidence that $1.63-trillion in gold was sold by Marcos through his Australian brokers.

Documents we reproduce on our CDs bearing the signatures of a number of top Swiss bankers show that UBS has other accounts, including gold bullion and platinum, which are even larger. Such giant accounts are not out of the question for immensely wealthy men like King Fahd of Saudi Arabia, whose family have been banking bullion in Switzerland for decades. According to Gemini Consulting worldwide private bank assets were $4.3 trillion in 1986, and were closing in on $14-trillion in 2000. So this account at UBS is not impossible.

UBS documents show that Crown Commodity Holdings was a subsidiary of Santy’s Crown Enterprises. The group representative was Alfredo P. Ramos, an executive of Santy’s company Diaz & Poirrotte Enterprises, registered in Monaco. Ramos states in an affidavit that ‘I know the late Don Severino Garcia Sta. Romana, Romana Poirrotte or Jose Antonio Diaz, under the code ‘From Father My Old Man . . . that once the work has begun, don’t leave until it’s done, be labor great or small, do it well or not at all’,” This homily, as we’ve seen, is one that Santy learned from Lansdale in 1945. It is the same homily Santy quoted in his holographic will. It is used as a code phrase consistently in Santy’s bank accounts. Such recurrences, over half a century, are not accidental. . . .

6. Many of the largest and most important banks were repositories of Santa Romana gold accounts and these banks all rebuffed Santa Romana’s heirs.

Note that, at the aforementioned UBS (like Citibank, a recipient of U.S. bailout funds after the financial collapse of 2008), a vice-president of the institution warned Santa Roman’s daughter that the bank and/or the Swiss government itself might have her killed if she pressed her case.

. . . According to videotaped interviews with Tarciana, immediately after Santy’s death Lansdale also was involved in the mysterious movement of gold bullion from Santy’s accounts at Citibank Manila to Citibank New York, possibly done to get the assets out of the Philippines before Marcos could attach them. Because the accounts were in Santy’s names, such transfers would appear to be illegal without authorization form a recognized trustee of his estate, or someone holding his power of attorney, for whom was Lansdale acting?

Once these assets left the Philippines, they joined other bullion and cash accounts that documents show Santy already had in America at Citibank, Chase, Wells Fargo, Hanover Bank, and other banks.

Soon after his death, Santy’s holographic will was probated in Manila, and Tarciana, Luz and Floredeliza were named by the court as legitimate heirs. Luz went to America hoping to gain access to the accounts at Citibank in Manhattan. There she enlisted the help of attorney Eleanor Jackson Piel, giving her Letters of Administration issued by the Philippine court. These had to be recognized by New York courts. Piel proceeded in Surrogate’s Court for the issuance of Ancillary Letters of Administration, which would give Luz right of access to his accounts at Citibank, Chase, and Hanover. This took time.

While Luz pressed her case elsewhere, Piel wrote letters to the head offices of all the banks concerned, asking about the Santa Romana accounts. Not a single bank replied.

Luz flew to Switzerland, visiting UBS in Geneva with two American friends. According to one of the Americans, Jim Brown: “I sat with Luz and another American . . . while she gave a vice-president then told Luz “he wouldn’t recommend her trying to claim this account represented, they would not be beyond having her killed first. He also went to tell her, that he wouldn’t recommend hiring any Swiss attorneys, because the bank would simply buy them off.”

7. In apposition to the story of the threats delivered to Santy’s heirs, the authors cite the harrowing experience of UBS employee Christophe Meili, who broke the story of Holocaust victims’ unclaimed funds in Swiss bank accounts.

We might scoff at the notion that a UBS vice president would make murder threats, but what of Christophe Meili? A student working nights as a security guard at UBS in Zurich, in January 1997 he discovered very old documents and books waiting to be shredded. They concerned assets of depositors who died in Nazi concentration camps. ordered banks not to destroy archival material. He took some documents and gave them to the Hebrew Congregation of Zurich. When asked later why he did it, Meili replied that he had recently seen the movie Schindler’s List.

“I knew I had to do something.”

A month later, when the documents were made public by others, Meili was fired from his $18,000 job at UBS. Robert Studer, President of UBS, insinuated that Meili was financed by an international Jewish conspiracy. “This issue of so-called unclaimed Jewish money in Swiss banks rears its head again and again. For us, it is no issue at all. The problem was thoroughly discussed after the Second World War and we conscientiously investigated then what money in our bank might have belonged to Holocaust victims because we wanted to settle the question once and for all. For us the case is closed.”

Much as the State Department insists the 1951 San Francisco Peace Treaty closed the door on compensation and reparations for Japan’s war victims. Much as Washington and the Marcoses insisted the Yamashita Gold story was only a myth.

UBS passed off the shredder incident as ‘unfortunate’ saying, “no one in our senior management would ever have approved such a decision.” Robert Studer was removed from all official duties, but remained the bank’s Honorary Chairman. Meili received over `100 death threats, and threats to his wife and children. They fled to America, where they were given asylum. Meili testified before U.S. Congressional committees investigating the hiding of Nazi assets by Swiss banks. Senator Anthony D-Amato called Christophe Meili an international hero. “The criminals are the ones who ordered the shredding of the documents.”

8. Ultimately Santy’s daughter Flordeliza was completely rebufed by UBS and the wizards of Swiss finance.

Scared and deflated, Luz returned to the Philippines. Three years later she and Brown went back to Switzerland to approach a different bank. This time, Brown told us they were successful in recovering the accumulated interest from one of Santy’s accounts, but the bank would not release the bullion itself. Another source told us Luz kept this recovery secret, feeling that she had been stonewalled so long that it would be absurd to forfeit any of it in taxes.

Meanwhile, Tarciana, Santy’s corporate treasurer-tried to access his accounts at HSBC in Hong Kong. Following the advice of attorney Artemio Lobrin who had been Santy’s tax consultant, she asked HSBC to verify the existence of the accounts mentioned in Santy’s holographic will. After showing them all the necessary codes, passwords, and documents, a bank officer told her the accounts had not matured, were therefore inaccessible, and to come back in 1988.

In turn, Flordeliza sought access to Santy’s accounts at the Hong Kong branch of Sanwa Bank. She had a passbook showing large cash deposits to that branch in March 1973. At first Sanwa denied it has a branch in Hong Kong in 1973. Then, despite all the documentation, they claimed they had no client called Santa Romana or any of his pseudonyms.

When Cory Aquino became president, her staff asked Australian financial expert Peter Nelson for help. He was shown computer sheets and forty passports bearing Santy’s photo. “The passports matched details on the numerous bank accounts. . . Most transfers had originated in Hong Kong before being moved to other parts of the world. I added up the amounts mentally as I went along and lost count at around forty billion dollars! I was shown photos of crates and some of these were open. I of course could not vouch for this bullion but there were certificates to match.”

The Aquino aides explained that Santy had left the majority of his estate to his daughter, which would make Flordeliza one of the richest women on earth, but when she tried to present the probated will to banks, she was told to prove that the man in the photo on all the passports with all the different names was in fact her father.

Meanwhile the banks would sit profitably on the money.

Nelson said: ” I told my Filipino friends there was a way out. If [Flordeliza] agreed to hand the money back to the government in the Philippines for a finder’s fee of say give percent, that would give her more money than [she] could spend in a lifetime and the government would lend their weight in pushing for its return. They thanked me and I flew back to Sydney.” Nothing came of it, and Flordeliza stayed poor.

9. Citibank was among the most prominent of the banks that frustrated Santy’s heirs. After being confronted with irrefutable evidence of the presence of billions of dollars in gold in its accounts, Citibank transferred the gold offshore, where it could not be touched. (For more about the insidious operations of “offshore finance,” examine the work of the remarkable Lucy Komisar.)

Note, in this context, that Citibank was the recipient of billions in bailout funds following the financial collapse of 2008, as were UBS and other banks involved in the insidious machinations that denied Santy’s heirs his estate.

Ultimately, all efforts fixed on Citibank, where John Reed was chairman and CEO. Under Reed’s direction, Citibank became richly involved in offshore private banking. With offshore deposits worth over $100-billion it was ranked third after UBS and with $580-billion and Credit Suisse with $292-billion. By shifting money from country to country, offshore assets are protected from litigation by creditors, ex-spouses, or heirs. Except for cases involving money laundering, securities fraud or narcotics, most foreign courts will not recognize a U.S. court order. So a claimant must fight for access through courts in a nation where the account is held, only to discover the money already has been moved to another jurisdiction. This is key to what follows.

In December 1990, Tarciana went to Citibank’s head office in Manhattan, with a friend acting as financial advisor and witness. “We were taken in to see John Reed,’ her friend said. “When we showed him our documents, passwords and code-phrases, the magnitude of it suddenly hit Reed. He went white, and panicked. You could see it in his face. He left the conference room in a hurry. A few minutes later he returned with several Citibank lawyers.” They told Tarciana to come back the following day.

“When we walked into the conference room the next day,” Tarciana’s friend recounted, “we found Reed sitting there with twenty lawyers. They told us these accounts did not exist.”

Again Tarciana and her friend went away. On inspiration, they flew to Albany where they visited the New York State Tax Office. In its public records archive, they obtained a list of all the accounts Santy had at Citibank and other banks in New York State under his own name and aliases, and his company names. (Reproduced on our CDs.) They also discovered that all state and federal taxes had been waived on interest generated by these very big accounts, a curious exemption.

Returning to Citibank, they were confronted once again by Reed and his phalanx of attorneys. Tarciana and her friend showed them a copy of the New York State tax records list, demonstrating that the bank had lied, and the accounts did exist. According to Santy’s own records and documents Tarciana had with her, Citibank held 4,700 metric tons of gold bullion belonging to Santy’s estate. No longer denying they had the accounts, the attorneys’ blandly told the two women to bring in ‘the real party’. They refused to identify whom they meant-possibly Santy’s corpse. They also said Tarciana needed ‘legal’ papers, which she already had shown them. They said Citibank wanted a statement from the Philippine government that it would not hold them responsible for releasing the money (again implicitly acknowledging the bank did hold the assets.) This inferred that the funds might be claimed by Manila as gold stolen by Marcos, although the accounts were set up by Santy long before Marcos came to power. The attorneys also said they wanted a waiver from Imelda Marcos, implying that the Marcos family might make claims (real or imaginary) to some of Santy’s assets. Finally, they said they also needed a waiver from the U.S. Embassy in Manila, apparently meaning a waiver from the U.S. Government. All this doubletalk was clearly to fend off Tarciana while the bank decided what to do next. That did not take long.

The solution was simple: Citibank would move all Santy’s assets offshore, from Citibank New York to Cititrust in the Bahamas. This would have the effect of putting the bullion outside the jurisdiction of New York courts, blocking any lawsuits contemplated by the heirs. Legally, such assets could not be moved out of New York jurisdiction without authorization of the account holder or his heirs, or assigns (meaning Tarciana as corporate treasurer). But if the gold were moved offshore without the knowledge of the account holder or his heirs, the burden would be upon them to recover it. Large shipments of gold bullion also cannot take place without the knowledge and approval of the U.S. Treasury Department and the Federal Reserve. Nor could the bullion enter Nassau without approval of the Bahamian authorities. But there appear to have been ways to get around such obstacles, perhaps by attributing ownership of the gold to Citibank itself, which some attorneys might argue qualifies as ‘wrongful conversion.’ . . .

10. Manifesting a frightening similarity to the gambits used to frustrate Santy’s heirs is the experience of Australian broker Peter Johnston, who also attempted to negotiate a UBS gold certificate.

Take the bizarre case of Australian broker Peter Johnston, who was asked by a client to negotiate a UBS gold certificate in Europe. While traveling, Johnston did not want to carry the certificate, so he left it in ‘safe Custody’ with the London branch of Australia’s Westpac Bank. He often lodged such certificates with Westpac to attest to its being genuine. Yet the branch manager felt ‘uneasy,’ and without asking Johnston faxed copies to UBS in Switzerland, asking if it was genuine. Without ever examining the original, UBS ‘informally’ declared it a forgery. It is UBS policy to call all such documents forgeries but to avoid doing so formally by Tested Telex because that is equivalent to sworn testimony in a court of law. An informal opinion casts doubt, while avoiding liability. UBS does that to routinely scare away people hoping to negotiate gold certificates. Normally the City of London Fraud Squad would refuse to pursue a charge based on an informal opinion, but this time the Fraud Squad set up a sting, and when Johnson walked in to the Westpac office on March 6, 1995, he was arrested and charged with attempted fraud-because the certificate might be phony and Johnston might try in the future to negotiate it. Amazingly, Johnston was convicted on this specious charge and languished in prison for 18 months. At no time did UBS actually establish that the certificate was a forgery, only saying it was not issued by UBS in Zurich. This was a blatant dodge, because UBS gold bullion deals are not done in Zurich but by their subsidiary, Warburg Dillion Read, at Glattburg near Zurich airport. In short, Johnston appears to have been falsely imprisoned on false testimony, for something he did not attempt to do. There are many similarities to the Schlei case.

11. Next, the broadcast sets forth some of the ways in which financial institutions and governments collaborate devise ways of discrediting owners of financial instruments held by those who are “not insiders” and can be thus intimidated or worse.

An expert on gold certificates, Wolfgang Jentsch, explains that these instruments “may take many forms and quite possibly will not be in the banking form. They are by their very nature private banking documents, and will not be in the public domain. . . the larger the amount concerned, the closer becomes the circle of those who know. . . it is rare that the main structure of the bank itself would ever know of their existence. . . The owner of the funds . . . would be given a number of other documents in order to secure the certificate. He would be given a letter which would provide the details of only those persons who would be able to verify the existence of the certificates and he would be given coded security numbers.” Jentsch said coding typically includes “what would appear to be severe spelling or grammatical errors . . .” Such errors enable the bank, when it wishes, to denounce the certificate as counterfeit.

In this chapter, we have seen how Santy’s heirs presented all the necessary documentation and codes, but still were stonewalled. We saw in Chapter Nine that Japan’s Ministry of Finance deliberately contrived the “57s” to look different from ordinary Japanese government bonds so they could be denounced as forgeries, allowing the Ministry to dodge payment. That UBS, Citibank and other banks might do the same must come as no surprise. When a client dies, it matters little whether he was an inmate at Buchenwald or president of Indonesia-the bank will do all it can to retain the gold. Here is an example of what John Kenneth Galbraith meant when he said, “The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it.”

12. Also terrifyingly instructive is the case of W.R. “Cotton” Jones, whose efforts at aiding with the negotiation of gold certificates resulted in his being threatened by the U.S. Secret Service.

Against this background, it is revealing to see how quickly the U.S. Secret Service rushes to the aide of a Swiss bank, when a customer walks in asking if a gold certificate is genuine.

In march 1996, Filipino attorney Ben Aragones met retired Wall Street broker W.R. ‘Cotton Jones.’ Aragones told Cotton how he had been arrested by Swiss authorities for trying to negotiate a gold certificate, spent three months in jail, and was forbidden to return. On another trip to Zurich, he said he and his wife were kidnapped and terrorized. He was told that UBS did this to scare him off forever.

Cotton, being a romantic, offered to test the water by seeing if the New York branch of Swiss Bank Corporation would tell him whether one of Ben’s certificates was real. Cotton would not try to negotiate the ‘cert’, which could be dangerous. If he only took a notarized photocopy, the original would not be confiscated. To be cautious, he chose the cert with the smallest denomination, only $25-million.

“On March 20, 1886,” he told us, “I walked into the Swiss Bank Corporation in New York City and asked that the bank verify and authenticate a $25-million Certificate of Deposit issued by their bank and bearing the Federal Reserve Seal.” They asked him to leave it for examination and come back in two days. When he returned on March 22, three men posing as bank officers demanded the original and made threatening noises. When Cotton tried to snatch his photocopy back, all three men jumped and identified themselves as U.S. Secret Service Agents, displaying badges and ID cards. They blocked his way and said if he forced the issue he would be assaulting a Federal Agent.

“I kept denying and still deny that I ever knew whether the documents were valid or not. They told me I would be in jail twenty-two years . . . that I had better cooperate with them so it would go easier on me.”

After ninety minutes of bullying, Cotton was taken downtown and issued two U.S. District Court Grand Jury subpoenas and ordered to be in Secret Service Agent Tom Atkinson’s office at 10 a.m. Monday. When Cotton appeared, he suffered more browbeating. Yet not once did anyone call the certificate false. He was told to appear before the Grand Jury the next day.

Cotton arrived on time, only to be informed that his presence was unnecessary….”

[…] been safe-housed in the Philippines, for an estimated value, in 1942 dollars, of 100 billions. In FTR #688, Dave Emory explores this fascinating case about global economy, war crime and high finance. Even […]

(Reuters) – Credit Suisse has agreed to pay a $2.5 billion fine to authorities in the United States for helping Americans evade taxes after becoming the largest bank in 20 years to plead guilty to a U.S. criminal charge.

The bank’s guilty plea resolves its long-running dispute with the United States over tax evasion, but could have implications for the clients and counterparties that do business with the group.

Credit Suisse said it had not seen a material impact in the past few weeks on its business, and that clients faced no legal obstacles from doing business with it despite the guilty plea.

Switzerland’s second largest bank escaped what could have been the worst outcome for its business – its top management stayed in place and it will not have to hand over client data, protected by Swiss secrecy laws. And the New York state bank regulator decided not to revoke the bank’s license in the state.

U.S. prosecutors said the bank helped clients deceive U.S. tax authorities by concealing assets in illegal, undeclared bank accounts, in a conspiracy that spanned decades, and in one case began more than a century ago.

“This case shows that no financial institution, no matter its size or global reach, is above the law,” Attorney General Eric Holder said at a news conference in Washington.

“We deeply regret the past misconduct that led to this settlement,” Credit Suisse CEO Brady Dougan said on Tuesday.

The Justice Department has not often pursued such convictions of financial companies, especially large ones that could become destabilized following an indictment. But U.S. politicians have pushed for tougher punishment for big banks in response to the 2007-2009 financial crisis.

…

So Credit Suisse gets a $2.5 billion fine and no other real penalties for over a century of tax-evasion? This will no doubt send a powerful message to the rest of the financial community: keep up the good workand stop worrying!

Amid concerns of bullion trade being used for routing of black money, Switzerland’s gold exports to India have risen further and is fast approaching Rs one-trillion mark for the entire 2014.

The Swiss gold exports to India stood at over 2.8 billion Swiss francs (over Rs 18,000 crore) in October, up from about 2.2 billion Swiss francs in the previous month, shows the latest data from the Swiss Customs Administration.

This has taken the total Swiss gold exports to India since January this year to 14.2 billion Swiss francs (nearly Rs 93,000 crore), as per the data compiled by Switzerland’s cross-border trade monitoring agency.

This surge in gold shipments has made India the largest destination for the yellow metal exports from Switzerland.

There are concerns that gold trade could be a possible route for laundering of unaccounted wealth, suspected to be stashed by Indians in Swiss banks, although there has been no official word from either countries so far in this regard.

The Supreme Court-constituted SIT, however, said in its latest report on black money that a dedicated institutional mechanism needs to be put in place to examine “mismatch between export/import data with corresponding import/export data of other countries on at least a quarterly, if not a monthly basis.”

The SIT said that this suggestion has been made by the Financial Action Task Force (FATF), while citing the Data Analysis and Research for Trade Transparency System adopted by US, to control over/under invoicing to some extent.

“It is established since years that over invoicing or under invoicing is known method for stashing black money outside the country. Main question is how to control this malady.

“If there is proper vigilance to a large extent by the Customs Department, mis-invoicing can be controlled because, nowadays, price of various goods/machineries is known in the international markets.

“For this, data is also published and is available on computer at any point of time. Hence, it was suggested that in a Bill of Export/shipping Bills, an entry should be included, namely, what is the international market price of the goods/machineries which were sought to be exported,” the SIT said.

The government has informed the SIT that this suggestion is already under consideration and is likely to be implemented within a short time.

As per the data from the Indian government, gold imports jumped 280 per cent to $ 4.17 billion in October. In September as well, gold imports increased manifold to $ 3.75 billion. This means Switzerland alone accounted for 60-70 per cent of the gold that came to India during these months.

…

While industry watchers attribute the surge during October and September partly to increased demand for yellow metal during Diwali and other festivals in India, the sudden spike is also being seen suspiciously in the backdrop of gold being used for ‘layering’ purposes to move funds from Swiss banks amid growing scrutiny for suspected black money.

According to banking industry sources, banks operating in Switzerland, including those headquartered in the Alpine nation and the Swiss units of other European banks, have turned wary about dealing with their Indian clients in the wake of a growing scrutiny of such accounts.

A number of Swiss banks, including three with significant global presence, have begun telling their Indian clients to sign undertakings that are aimed at ‘derisking’ the banking institutions from potential risks arising out of regulatory actions against the bank customers by foreign governments.

Some banks are also telling their clients to close their accounts if they are not ready to take such risks, or if they have apprehensions about such accounts not being compliant to regulatory requirements in their home countries.

Through these ‘derisking’ undertakings, the customer agrees to take responsibility for any possible regulatory or administrative compliance with international norms.

A new strategy of ‘layering’ through gold and diamond trade came to light earlier this year at Swiss banks to thwart any attempt for identification of real beneficiary owners of funds entrusted with them, government and banking sources have said.

There is a growing suspicion that a portion of gold and diamond trade is being used to route funds from Swiss banks to India and other destinations.

‘Layering’ is a key stage in money laundering and involves moving illicit funds around financial system through a complex series of deals to complicate the paper trail.

This layering typically takes place between the first stage – placement of black money in the financial system either in cash vaults, or through a series of cash or sham financial transactions – and before the final ‘integration’ stage when money is put back into the financial system through various transactions for the benefit of its final recipient.

There has been a huge political uproar over country’s black money allegedly stashed in Swiss banks and the new government has said it is committed to tackling this menace.

As per Swiss National Bank’s latest data, the total money held by Indians in Swiss banks stood at over Rs 14,000 crore as on December 2013, up by nearly 42 per cent from a year ago.

NEW DELHI: Identity of 427 account holders abroad has been established and 250 of them have admitted to having accounts, finance minister Arun Jaitley revealed on Wednesday while asserting that the government is on the right track in bringing back illicit money stashed abroad.

Replying to a debate on black money in the Rajya Sabha, he said the government will “pro-actively chase” those having black money and will not rest till the last account is identified.

Bringing back black money stashed abroad is a procedure which will take time, he said while responding to attack by opposition which questioned non-fulfillment of the poll promise of BJP leaders of getting the illicit money back in 100 days.

…

Spelling out the steps being taken by the government, Jaitley referred to the HSBC list of 627 account holders received by the government and said identity of 427 of them has been established. 250 of them have admitted to having accounts, making the government’s task easier, he added.

Replying to opposition criticism, he said, “We have done more in 100 days than what other governments had done.”

The confidentiality clause prevents disclosure of names of foreign account holders unless prosecution is launched against them in a court of law, he noted.

Jaitley said more prosecutions are going to be filed in the coming weeks with regard to people figuring in the HSBC list, who are suspected to have illicit accounts there.

“We are on a learning curve… The government is going to be on the right track even if it takes extra time,” the finance minister said and suggested that the government was even willing to change laws if required to bring back black money.

Talking about the 427 accounts identified, he said the government is in the process of their assessment and notices are being sent to them.

“We will be extremely pro-active in chasing these people. It is a procedure that will take time but we will have foolproof procedure,” the finance minister said.

Responding to questions over what had been done to bring back black money, he said in the very first meeting of the Modi Cabinet in May, a decision was taken to set up a special investigation team (SIT), a proposal regarding which had been pending since July 2011.

The government, he added, has handed over all the documents relating to black money to the SIT which will be submitting its second report to the Supreme Court by the end of this month.

On demand for disclosure of names of account holders, he said, “the question is not whether to disclose the name but how and when to disclose them”.

He, further, said that premature disclosure of names would help the account holders as it would prompt countries to refrain from providing information..

The government will not follow “suicidal” course by disclosing the names, Jaitley said, adding it could only be a “one-day thrill”.

“We have to disclose the names in a very prudent and thoughtful manner,” he said.

India has 92 Double Taxation Avoidance Agreements (DTAAs) with various jurisdictions and except one with Romania, all have confidentiality clauses, Jaitley said.

…

Jaitley said the government has held discussions with Switzerland for sharing of information on Indians having illegal accounts in Swiss banks.

So it sounds like the Indian government is gathering names, although the naming of account holder names is still an open question. It’s one of many open questions, like whether or not the account holders are big fish or small:

Paris: Indian investigators have met in France with whistle-blower Herve Falciani, responsible for the world’s biggest-ever breach of banking secrecy. In 2008, Mr Falciani was an employee of HSBC in Geneva when he leaked data related to more than 100,000 bank accounts, which included some held by Indians.

Mr Falciani told NDTV today that he has proposed what he described as “a larger overhaul” of India’s black money investigation. “Looking for names only leads to ‘small fish’,” he said, “names should be the end point not the starting point of any investigation.”

He said he can do for India what he has done for other countries like France and Belgium – find “new ways of understanding offshore banking because when we deal with corruption, when we deal with black money it’s not only about a local problem, it’s wider than that.” His assistance has led to other countries indicting HSBC’s Swiss arm in Geneva for aiding tax evasion and money laundering by offering ways to wealthy clients to hide assets.

Mr Falciani, 42, was contacted by Indian officials last month for help after he appeared on NDTV and claimed that Delhi had access to “less than 1%” of data that could help it track down how money was being hidden by Indians in foreign banks. In 2011, France shared with India a list of over 600 Indian accounts that allegedly held illicit accounts at HSBC’s Private arm in its Geneva branch.

NDTV’s sources say India will assess Mr. Falciani’s offer and if approved, will send him a proposal.